With all the talk of excess inventory and flood of foreclosures, the idea of a looming housing shortage sounds unrealistic if not fanciful.

After all, the most recent data from the National Association of Realtors (NAR) out last week showed a 5.1% decline in existing home sales in June. Meanwhile, total housing inventory increased 2.5% to four million homes available for sale, an 8.9-month supply, up from an 8.3-month supply in May.